Disproportionately Impacted: Closing the Racial Wealth Gap through Student Loan Cancellation, Payment Reforms, and Investment in College Affordability

The student debt crisis is particularly dire for Black borrowers. Black degree-seekers are more likely to take out student loans to pay for higher education than white students, and they carry the largest average student loan debt of all racial demographics in the nation. The COVID-19 pandemic has created even more barriers to both postsecondary success and workers' economic stability, and Black Americans are still struggling to make a full economic recovery. The pause on student loan payments has temporarily eased the financial stress of student debt for millions of borrowers during the public health emergency. However, this relief is only temporary. In this paper, the Center for Law and Social Policy (CLASP) and the National Consumer Law Center (NCLC) explore the disproportionate impact of student debt on Black borrowers. The authors make recommendations to address the dual student loan and college affordability crises through federal policies and executive action. These steps include: (1) administrative action to extend the student loan payment pause; (2) ensure a smooth transition of loan accounts to new servicers; (3) provide increased protections for borrowers, particularly those who are victims of predatory lending and for-profit colleges; (4) improve existing repayment options, including Income-Driven Repayment (IDR); and (5) invest in college affordability through federal grants like the Pell Grant, a federal free community college program, and support for student basic needs. [This report was produced with the National Consumer Law Center (NCLC).]